Trade credit insurer Atradius has published a Country Report on Japan,
providing businesses with an insight into the Japanese trading
Atradius’ role as a trade credit insurer is to protect businesses from the risks of not getting paid when trading goods and services. In addition, with access to trading intelligence on 200 million companies worldwide, Atradius is a key commentator on the global marketplace.
Data resources, knowledge and experience combined with on-the-ground experts across the globe enables Atradius to advise and guide businesses on the risks and opportunities of trading overseas.
Publication of the report is timely as new figures this month reveal that Japan’s economy grew quicker than expected, making the country a stronger contender for business investment.
Key findings within the Atradius Japan Country Report:
· Insolvencies down but smaller players squeezed: Insolvencies are forecast to decrease by 10% in 2015. However, smaller players in some sectors like retail and construction are more vulnerable due to shrinking margins. Additionally, businesses that rely on imported products also face increased expenses due to the depreciation of the Japanese Yen, which could challenge their financial resilience.
· Economic growth predicted: In 2015, the economy is expected to grow 0.9%, followed by 1.4% growth in 2016 as private consumption is expected to rebound and export growth remains robust.
· Consumer spending to increase: Following the increase in VAT in April 2014 from 5% to 8%, there was a drop in consumer spending. However, a rebound is expected in 2015 due to strong employment figures and good stock price performance. This is also helped by the postponement of a further VAT increase from October 2015 until April 2017.
· Consumer confidence rebounds: After decreasing in H2 of 2014, consumer confidence has been on the rise since the beginning of 2015. Private consumption is expected to grow 0.7% in 2015 and 1.4% in 2016.
· Exports up: The Bank of Japan’s loose monetary policy has led to depreciation of the Yen, boosting exports. In 2014 exports of goods and services increased 8.2% and are expected to increase 8.3% in 2015 and 6.0% in 2016.
· Challenges remain: Despite a decreasing trend, the fiscal deficit is high and the country faces demographic challenges: the population is shrinking and the working age population is also declining. Without appropriate measures, the Japanese will inevitably face a shrinking tax base and rising expenditures on retirement benefits. Many industries already face some difficulties due to a lack of workforce, leading to higher labour costs and hurting their international competitiveness.
· The future: With the outcome of the December 2014 election result Prime minister Abe has a strong mandate to implement necessary reforms and get the economy on the right track. To achieve a sustainable rebound and to boost the country’s long-term economic performance, there is an urgent need to make the labour market more flexible, to end protection for farmers, doctors and pharmaceutical companies, and to introduce more business deregulation. The government has announced its intention to tackle those issues in its current term, but all of those reforms are still vehemently opposed by powerful interest groups.
(Source - Atradius Press Release)